Criminal Justice News

Friday, September 25, 2015

Third Person Sentenced in Las Vegas for International Biofuel Fraud Conspiracy

Alex Jariv, 28, of Las Vegas, Nevada, was sentenced today in
federal court to 30 months in prison and three years of supervised release for
his role in illegal schemes to generate and sell fraudulent biodiesel credits,
marking the culmination of nearly four years of investigations and prosecutions
for this complex international fraud scheme.Alex Jariv pleaded guilty to one count of conspiracy to commit wire
fraud, make false statements and launder monetary instruments.Jariv was ordered to forfeit $491,061 in
previously seized cash, an SUV, real estate and the contents of several bank
accounts in the United States and abroad that were some of his proceeds of the
conspiracy.

Alex Jariv is the third person to be sentenced for their
role in the scheme.James Jariv, 64, of
Las Vegas, Nevada, was sentenced in August to ten years in prison for his role
in the illegal schemes to generate fraudulent biodiesel credits and for his
role in exporting biodiesel without providing biodiesel credits to the United
States.James Jariv was also ordered to
make restitution in the amount of $6,345,830 and to forfeit between $4 to $6
million in cash and other assets.

Nathan Stoliar, 64, of Australia, was sentenced to two years
in prison in April for his role in both conspiracies and ordered to pay more
than $1.4 million in restitution and to forfeit of $4 million in cash.James Jariv and Stoliar both pleaded guilty
to one count of conspiracy, one count of conspiracy to engage in money
laundering, two counts of wire fraud and one count of making false statements
under the Clean Air Act.

“We simply will not tolerate and will vigorously prosecute
schemes like this one, that defraud a program designed to strengthen our
nation’s petroleum independence and improve our air quality,” said Assistant
Attorney General John C. Cruden for the Justice Department’s Environment and
Natural Resources Division.

“Mr. Jariv is the third defendant sentenced to prison in
this complex and egregious scheme to defraud fuel suppliers and the United
States,” said U.S. Attorney Daniel Bogden for the District of Nevada.“Through the tenacious work of our investigators
and prosecutors, we also were able to seize and forfeit millions of dollars
from numerous bank accounts, as well as real property in Nevada and California,
jewelry and other assets.”

“The Renewable Fuel Standard helps reduce the nation’s
impact on climate change and lessens our dependence on foreign oil and this
case shows that EPA takes seriously its responsibility to bring violators of
this important program to justice,” said Special Agent Jay Green, Special Agent
in Charge of EPA’s criminal enforcement program in Nevada. “In order to ensure
a level playing field, it’s vital that companies following the law don’t have
to compete with those that break it.”

The Energy Independence and Security Act of 2007 created a
number of federally-funded programs that provided monetary incentives for the
production and use of renewable fuels such as biodiesel in the United
States.Biodiesel producers and
importers can generate and attach credits known as renewable identification
numbers (RINs) to the gallons of biodiesel they produce or import.Because certain companies, such as companies
that sell transportation fuel in the United States, need RINs to comply with
regulatory obligations, RINs have significant market value.They are routinely bought and sold in the
marketplace.

Beginning around September of 2009, James Jariv and Stoliar
operated and controlled a company – City Farm Biofuel in Vancouver, British
Columbia, Canada – that represented itself as a producer of biodiesel from
“feedstocks” such as animal fat and vegetable oils.James Jariv and Stoliar also formed a company
called Canada Feedstock Supply – that represented itself as City Farm’s
supplier of feedstocks necessary to produce biodiesel.James Jariv operated and controlled a company
based in Las Vegas called Global E Marketing (GEM).

Alex Jariv worked for and on behalf of these companies.Using these three and other closely-held
companies, the three defendants claimed to produce biodiesel at the City Farm
facility and to import and sell biodiesel to GEM and then generated and sold
RINs based upon this claimed production, sale and importation.In reality, no biodiesel produced at City
Farm was ever imported and sold to GEM as claimed.The Jarivs and Stoliar used GEM to claim to
blend the biodiesel with petroleum diesel, allowing them to sell the RINs
separately from any actual biodiesel.Using this scheme, the three men falsely claimed to import, purchase and
blend more than 4.2 million gallons of biodiesel.They then sold the RINs, and fraudulently
generated more than $7 million.

James Jariv and Stoliar also purchased and resold RIN-less
B-99 biodiesel as B-100 biodiesel, which allowed them to charge substantially
more for this product than if it has been accurately labeled.They exported significant amounts of the RIN-less
B-99 they bought in the United States to Canada and Australia.They then sold the biodiesel in those
countries and conspired to not acquire and provide RINs to the United States
for these exports as they were required to do by law.In doing so, James Jariv and Stoliar failed
to give to the United States RINs worth in excess of $34 million, keeping this
money for themselves instead.

Finally, James and Alex Jariv and Stoliar conspired to
launder the proceeds of their crimes, utilizing foreign banking institutions
and complex financial transactions to promote their illegal schemes and
distribute the proceeds of their crimes.Accounts were utilized in Canada, Nevada and Australia and transactions
between the defendants’ closely-held companies were described as other
legitimate transactions involving biodiesel, when in reality they were not.

The investigation into the Jarivs’ and Stoliar’s activities
was the result of collaborative work by the EPA’s Criminal Investigation
Division and the FBI, with assistance from the United States Secret Service,
the Internal Revenue Service-Criminal Investigations, the Department of
Homeland Security and the Royal Canadian Mounted Police.

The case was prosecuted by Wayne D. Hettenbach of the
Environmental Crimes Section, U.S. Department of Justice, Assistant U.S.
Attorneys Crane M. Pomerantz and Daniel D. Hollingsworth of the U.S. Attorney’s
Office in Nevada and Assistant Deputy Chief Darrin L. McCullough of the Justice
Department’s Criminal Division, Asset Forfeiture and Money Laundering Section,
with the assistance of the Justice Department’s Office of International Affairs
and the U.S. Attorney’s Office for the Southern District of Texas.